South Africa electric utility dispute with major coal supplier

The dysfunctional issues surrounding the government managed electric utility threatens the so called National Development Plan.

Here is the latest business news from multiple sources. News reports suggest that South Africa’s ailing mining sector has already shed more than 35,000 jobs over the past two years.

Mining company’s complain of the rising costs, particularly for electricity and wages.

Tonight, mining giant Glencore announced that it is placing its Optimum coal operation under “business rescue” due to Eskom’s unreasonable supply contracts. Optimum previously contracted to supply 5.5 million metric tonnes of coal per year to Eskom. ”

Glencore claims that “This has resulted in it supplying the coal at a price significantly below the cost of production for a number of years”.

Meanwhile, South African coal prices for exported coal have reportedly dropped 23 per cent over the past year due to a global glut of the fuel. Eskom is therefore looking to renegotiate the rate it pays for domestic coal.

All of the coal is mostly moved by rail.

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